A GOVT THAT LISTENS !

A   GOVT    THAT    LISTENS  !

I sent following suggestion to NDA Ministers / Secretaries and other Policy Makers on 26 Feb 2014

From news-report in MINT ( 21 Nov 2015 ), it seems they do believe this could be one of the many methods to create jobs

I await its early implementation

But Tax Breaks should not be linked to a Company's annual " Salary Bill "

These should be linked to :

*  No of permanent employees , OR

*  No of NEW hires ( net addition after retirement / resignation / termination etc )

If you too believe likewise , lend your own voice

hemen  parekh

22  Nov  2015

hemenparekh....in  >   blogs

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(  Source : hemenparekh...in   >   Blogs /  26 Feb 2014 / Create  Wealth  to  Create  Jobs  )

To complete this ECO SYSTEM , we  need to think " Out of the Box " in the matter of Corporate Tax Regime , as well

Current trend in industry , all over the world , is to

>  Add highly productive , very expensive machinery to " Automate " all

    manufacturing processes

>  Reduce manpower by increasing " Capital / IT Intensity "

>  Hire low skilled workers by transferring higher " Skills " to machinery

>  Outsource manufacturing to countries where manpower is cheap

>  Move out of " Manufacturing " and shift to " Services "

India cannot swim against this World-wide Trend

We must innovate,  to not only survive but to grow in this scenario

Here is my suggestion :

Set in motion , " INVERSION  of JOB  REDUCTION " regime , under which ,

"  The more jobs a company creates , the less Corporate Tax it pays "

    ( Incremental  )

Example :

> Up to employment of 100 persons  ...................... 30 %

> 101  -  500 persons............................................ 25  %

>  501 - 1000 persons ........................................... 20  %

>  1001 - 5000 persons ......................................... 15  %

>  5001 - 10,000 persons ....................................... 10  %

>  Above 10,000 persons ........................................   5  %

Let us celebrate those who provide employment to large number of persons

Let us celebrate BIGNESS

Let us create hundreds of  WORLD SIZE corporations and take on the World

On top of this , provide additional tax - breaks ( discounts ? ) to corporate as follows :

> Average Age of Employees at 30 years.......................  1 %

> Ave age at 25 years.................................................  2 %

> Ave age at 20 years .................................................  3 %



Of course , very strict and transparent rules will need to be framed to

compute,


>  Number of Employees  ( Permanent - not probationers / trainees )


> Average Age ( as on 31 March of Tax year )......etc




But , here is an important aspect of this ,


" Incentivize  Job  Creation  "  Scheme

Today's labour laws make it extremely difficult - if not impossible - for employers to layoff / retrench workmen , if demand shrinks


Hence , to take advantage of this Scheme , employers are unlikely to hire thousands of youth , if they cannot easily trim the workforce , to match the shrinking demand


So , an important corollary of this Scheme is to modify our existing Labour Laws to facilitate layoff / retrenchment , when situation so demands , while protecting the interests of the workmen concerned

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(   Source : MINT  /  21 Nov 2015   )

New Delhi: The government is contemplating offering tax incentives to companies in the manufacturing sector, including tax deductions on emoluments paid to new employees, to encourage firms to step up hiring and create jobs under its Make in India initiative.

The government said it is inviting more suggestions by 2 December on other incentives that it can offer to boost employment generation in the manufacturing sector.

It put up suggestions that it has received internally from various government departments and other stakeholders on the mygov.in website.

Suggestions being considered by the government include financial incentives, tax incentives under the Income-tax Act, 1961, and subsidies for equipping employees with job skills, and upgrading and improving employment exchanges.

Proposals include tax deductions on several accounts, such as salaries paid to employees whose total emoluments are less than Rs.6 lakh per year on hirings exceeding a threshold that’s less than the 10% workforce expansion for which the tax break is available now.

This incentive will be offered for three years from the time a new employee is hired.

The workforce expansion threshold is proposed to be interpreted liberally; if a company exceeds the threshold in a particular year, it would be carried forward to support eligibility for the tax break in a subsequent year when it falls short of the threshold.

The National Democratic Alliance government, which came to power last year promising to step up employment generation for the millions who enter the job market every year, has made the manufacturing sector a key priority.

The Make in India initiative is aimed at attracting investment in manufacturing.

A government statement said economic growth and the Make in India programme’s prospects would depend on steps it takes to ensure that the investors are incentivized for creating jobs and upgrading the skills of India’s workforce.

“The Government of India is taking several measures for promoting the growth of the manufacturing sector in India. The Make in India campaign has been initiated with the view of driving investment in this sector by creating an environment suitable for sustained growth of manufacturing, which will lead to all-round economic benefits including employment generation and income growth,” it added.

Ajay Dua, a former secretary with the ministry of industry and commerce, said that given the manufacturing sector has not been able to increase direct employment to the extent it had been expected to, despite the availability of cheaper capital, the proposed tax breaks are worth trying.

“This shows the nature of exemptions are changing. The government seems to be trying to achieve the goal of employment growth through fiscal measures, which is desirable,” he added.

The government is also examining the possibility of changing an existing condition which requires a worker to have been on the payroll of a company for at least 300 days in a year for the employer to receive the tax break; the number of days may be reduced to 240 days.

It is also willing to provide weighted tax deduction for training and skill development, and examine the possibility of reducing an employer’s contribution to social security benefits of new employees for a limited period under which the employer’s contribution could rise from 0% to 100% in a phased manner.

It has also proposed sharing data and results of government recruitment examinations to other employers if the applicants agree.

Opening government-controlled employment exchanges to public-private partnerships or to the private sector by amending the Employment Exchange Act is also an option